Could cutting interest rates save our economy?

Interest Rate Definition

The 2019 Coronavirus outbreak, which forced countries to go into lockdown and practice social distancing, has hit economies hard and the Malaysian economy has been unable to withstand it either. Bank Negara Malaysia has started cutting interest rates, up to four times this year and the overnight policy rate down to 1.75 percent, the lowest level since it was implemented as a policy tool in 2004. This level is also lower than the overnight policy rate of 2% during the 2009 international financial crisis.

The authorities hope that this ultra-low loan costs will revive the Malaysian economy. That’s because it will help ease the burden on loaners and reduce debt-relief cases, thereby mitigating the negative impact on the economy. This, if done right, will help to promote economic recovery if the outbreak is under control.

At the same time, low loaning costs will encourage other loaners to borrow aggressively, thereby stimulating economic activity. However, the positive effects will be delayed, as confidence in borrowing will only be restored when the economy is more stable.

Enterprises transition towards digitalization.

However, I believe that businesses that have weathered the crisis will seize the opportunity to invest and expand their businesses, especially those that are transforming their businesses into digital at a time of weak market demand and generally low operating costs.

On the other hand, the low interest rate environment created by the Bank of Negara has its drawbacks, such as the money that people borrow from taking advantage of the low interest rates may not be used to do business and stimulate economic activity, but may push up asset prices as a result of inflows into real estate and the stock market.

At present, as the domestic industrial market is not stable, it is expected that it will take some time to see if people have regained confidence, buy assets and push up asset prices. In any case, I think that the government’s resumption of the HOUSING Scheme (HOC) and the exemption of industrial profits tax will help the industrial market.

Increasing stock market risk.

At the same time, there are signs that low interest rates have improved the Malaysian stock market, as evidenced by the continued sell-off of bursa stocks by foreign investors, but by the surge in local retail investors. There have been stories that revealed that someone had asked his father why he offered his bank term deposit, and the answer was to transfer the money to the stock market. Shocking.

As more and more retail investors offer to invest in the stock market, they are exposed to higher risks. The higher the so-called potential risk, the higher the potential return, the lower the potential risk, and the lower the potential return.

The interest earned on keeping money in the bank is low, but the risk of losing the deposit is low. Investing in the stock market is the opposite, since the stock itself is a riskier investment vehicle, the chances of a return are naturally high.

Relying on interest on deposits.

Indeed, another drawback of low interest rates is the low return on deposits held in banks. This group will bear the brunt, especially those who rely on bank savings to cope with the cost of living. As a result, the Government has decided to sell Muslim bonds to help them get a higher return, but the amount of the bond is small.

Low bank interest rates have also caused many people in the past few years to invest their hard-earned money towards the “money game”, hoping to make quick money from it. However, many people have no return on such “investments”.

I hope you have learned from it, after all, there is no easy way to make money in this world.

Benjamin Graham“The intelligent investor is a realist who sells to optimists and buys from pessimists.”

What Benjamin Graham Taught Warren Buffett About Investing

Don’t lose money and play the long game

“Every day, do something foolish, something creative, and something generous.” Those are the words of Benjamin Graham and, according to his most famous student — Warren Buffett — “he excelled most at the last.”

Benjamin Graham is the “father” of value investing, a long-term, contrarian approach to managing money. From 1936 to 1956, Graham’s company achieved a stellar 20% annual return for its investors. If you had invested $10,000 with him over those 20 years, you’d have walked out with $383,375.99 — or about $3.6 million in today’s dollars.

Graham is also one of the main reasons why, today, companies pay dividends to their shareholders.

In 1926, companies first had to file public financial reports. Graham analyzed those of Northern Pipeline, an oil company owned by John D. Rockefeller, and found they had $95 per share in extra cash that they weren’t using. Graham rallied shareholders together and, two years later, received a board seat and $70 per share — along with everyone else. Rockefeller supported his motion and pushed other companies to do the same — which they still do today.

When Warren Buffett first approached Graham in 1951, he offered to work him for free — to which Graham said: “You’re overpriced.” Knowing how much work it is to teach someone who can’t contribute much yet, Graham only hired Buffett three years later, but the rest is history.

Maybe because of Buffett, Graham decided to write his knowledge down. To this day, Buffett, once the richest man in the world, calls Graham’s book The Intelligent Investor “the best book about investing ever written.”

Here are 3 lessons from it that’ll help you understand and grow your money.

1. Follow the 3 risk-mitigating principles.

Warren Buffett often shares his “two only rules for investing:”

  1. Never lose money.
  2. Never forget rule #1.

Buffett has those rules because the value investing approach he learned from Graham follows three core, risk-mitigating principles:

  1. Always analyze the long-term evolution and management principles of a company before investing.
  2. Always protect yourself from losses by diversifying.
  3. Always focus on safe and steady returns over crazy profits.

Nobody can predict the next Facebook, but everyone can protect themselves against losses.

Intelligent investors collect evidence of a gap between current price and intrinsic company value. Only when they find that evidence do they strike — and then wait for the value to unlock.

They invest into a few but not too many of those companies in order to not lose everything when one investment fails, and they’re perfectly happy with any return that beats the stock market average of 8%.

2. Don’t trust Mr. Market.

Graham often imagined the entire stock market as a single person. What would that person be like?

He said that if Mr. Market showed up on your doorstep each day quoting you various stock prices, most of the time, you’d probably ignore him as you would any other door-to-door salesman. You’d think prices are suspiciously cheap or way too high — and you would be right.

Mr. Market is not the brightest, totally unpredictable, and suffers from serious mood swings. Don’t trust Mr. Market.

When Elon tweets the right thing, Tesla’s stock goes up. If it’s the wrong thing, it goes down. When a new iPhone comes out, people queue in line, and Apple’s stock goes up. When an influencer finds a flaw in the phone the next day, the stock plummets.

None of this has anything to do with the value of the company as a whole — and yet, these things affect Mr. Market! Humans are too good at finding patterns. We see them even where none exist.

If you want to be an intelligent investor, you must do your own homework.

3. Develop a formula and stick to it.

A common piece of advice among poker pros is this: Leave your emotions at home. Money is a numbers game. It requires logic, not feelings.

To detach himself and cut the emotional stress out of investing, Benjamin Graham worked by a set of strict formulas. Some of them helped him evaluate companies, others manage his money, such as dollar-cost averaging.

Dollar-cost averaging means you set a fixed budget you will invest at fixed intervals. Every week, month, or quarter, you’ll invest more in the stocks you’ve previously determined are valuable, no matter the price.

For example, I’ve set a recurring transfer for 10% of my income to go into my brokerage account each month. Then, I use that to buy new stocks on my list or more of the ones I already own.

This can also be emotionally demanding because you’ll keep investing the same budget regardless of whether stocks look cheap or expensive, but it’s still much easier than constantly fretting about how much to invest when, why, and into what.

Use formulas in your investing. It’s a great way to protect yourself against losses — and both Buffett and Graham thought that’s what it’s all about.


The Intelligent Investor explains value investing, a long-term money management strategy focused on steady profits, ignoring the daily whims of the market, and picking companies with high intrinsic value.

Remember these three lessons to take advantage of the miracle of compounding interest:

  1. The three principles of value investing are analyzing companies for their long-term evolution, protecting yourself against losses, and going for consistent profits rather than crazy bets.
  2. The market as a whole is biased, irrational, and moody, especially in the short term. Ignore Mr. Market.
  3. Stick to a set of strict formulas by which you make all your investments.

“The intelligent investor is a realist who sells to optimists and buys from pessimists.”

— Benjamin Graham

11 Angel Investing Lessons

In the words of Charlie Munger, investing requires a latticework of mental models. Here are 11 lessons to begin filling out your angel investing lattice:

  1. If you can’t decide, the answer is no
  2. Proprietary dealflow means ‘they want you’
  3. Investing takes years to learn, and longer to see returns
  4. Valuation matters
  5. Back $0B companies
  6. Judgment is important but overrated
  7. Invest only in technology
  8. Some of the best investors have no opinions
  9. Incentives make for bad advice
  10. Play fantasy football
  11. Power beats contracts

1. If you can’t decide, the answer is no

If you can’t decide on an investment, the answer is no. For practical purposes, there are an infinite number of investments out there, so pass.

That doesn’t mean you won’t regret it. But the next investment is just as good a priori.

Also, your experience and judgement is only going to get better by the time you see the next deal.

2. Proprietary dealflow means “they want you”

Nobody thinks they have a shortage of dealflow. The hard problem is getting your money into the startups you want. That means the company wants you over other investors. Without “‘they want you,” you will get cut out of good investments and end up with adverse selection of weaker companies. It’s okay to pass on investments, but you don’t want them to pass on you.

Missing out on a few investments can mean losing all your money because of the power law returns of investing. The top deal in a good portfolio of N investments returns as much as deals 2 through N combined. The 2nd best deal returns as much as deals 3 through N combined. If you miss out on the top deal because they didn’t think you were good enough, you’re going to miss out on most of your returns.

You never want to hear, “I will come to you if I don’t get money from Sequoia.”

3. Investing takes years to learn, and longer to see returns

Get started with angel investing now. It takes years to learn and longer to see returns. You want to invest in 30 companies at a minimum–that takes time.

You will start with small investments because your later ones will get better as you gain expertise and brand. That means your returns will take even longer.

It takes a long time to learn, but investing is one of the few professions where you can improve until the day you die.

4. Valuation matters

Valuations for pre-traction companies between 2005–2010 were $1–5M pre-money for the first non-friends-and-family round. Funds that invested during this time period made 4x-100x returns.

These valuations moved to $4–6M pre-money after 2010, with some demo days in the $8–10M range. This likely cut returns by 2/3 or more.

You can’t build a portfolio of pre-traction investments at $8–10M pre-money and expect to make a venture return. On occasion, you can make an exception, but you can’t do all of your investments at this price.

You will have to pass on great teams because the valuation is too high. You will have to pass on future iconic technology companies because the price is too high. But passing on a future iconic company at a $40M pre-money gives you the capital to take 10 shots on goal with unknown companies at $4M pre-money.

You can’t negotiate valuation unless you’re putting in one-third to one-half of the round. Or you’re the first check into the company. In this case, say “I like you but I can’t make the valuation work, but I would invest if the valuation were X.”

Despite high valuations, it’s still possible to make money in angel investing. If you can’t make money in tech, you can’t make money anywhere.

5. Back $0B companies

To quote Vinod Khosla, invest in “$0B companies” that are worth $0B today but could be worth $1B tomorrow. Focus your attention only on companies with the potential for a 100–1000x return. Otherwise, pass.

Without these large exits, your portfolio will not achieve a venture return.

6. Judgment is important but overrated

Some markets are obviously bad and should be avoided. But judgment about markets is less important than you think, because there is so much luck and randomness involved. For example, companies can do hard pivots into new markets like Twitter, Slack and Instagram.

Judgment is not about doing a lot of research, digging and homework. By the time you figure it out, you will have missed the deal.

Instead, learn a few markets really well. Of course you will learn about new markets over time. But learn a few markets really well.

Buy all the products and try them. Find the best scientists in the market and invest in them. They can help you with research on your next set of investments. This is an unfair advantage.

You can’t read about new markets unless you’re reading research papers. Waiting to learn new markets by reading about it on TechCrunch is too slow. Start with research papers and then call the grad students who wrote them.

7. Invest only in technology

The best returns come from investing in technology companies. Avoid companies that don’t develop meaningful technology (either software or hardware).

The 5 largest companies in the S&P 500 (Apple, Google, Microsoft, Amazon, and Facebook) are all technology companies. The largest private companies are also technology companies.

There are exceptions like Dollar Shave Club. Their early investors had good returns. But you should only invest in technology as a rule of thumb.

8. Some of the best investors have no opinions

“I have no idea what’s hot. But I’m certainly always listening. Big Dumbo ears. Just listening.” — Doug Leone, Sequoia

Some of the best investors on the planet have no strong opinions about a particular business. They try not to project into the future, so they can listen intently in the present.

Almost any entrepreneur will be smarter in their market than an investor. The investor’s job is to listen and have intuition about whether the founders are smart, honest, and hard-working.

These investors don’t fall in love with the business. When it comes time to do a new round, they re-evaluate the business from scratch and ignore sunk costs.

If you’re thinking about all the great things you could do if you were running the business, you’re going down the wrong path. You’re not running the business.

If you are telling the entrepreneur what to do, don’t invest. Thinking like an investor is different than thinking like an entrepreneur who is determined to make a business work.

9. Incentives make for bad advice

Incentives influence the advice you get from VCs, lawyers, incubators, and us. Everyone serves their own interests first. The best source for angel investing advice is other angels and founders.

People are generally well-meaning but, in the worlds of Upton Sinclair, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

10. Play fantasy football

Build your instincts by looking at startups without investing. This will build up your instincts, which are what you use to make investment decisions. And you need a lot of data to build up your instincts.

In the old days, you had to work at a VC firm to see dealflow. You had to make a few investments and lose money before getting good judgment. John Doerr famously called this “crashing a fighter jet.“ First you lose $25M, then you have some judgment.

Now you can get judgment without crashing the fighter jet. You can see dealflow from your friends, your incubator, demo days, and AngelList. Write down what you like and dislike about each deal and see how your judgment develops over time.

11. Power beats contracts

Contracts can be renegotiated. You will be pressured to renegotiate your investment if you don’t understand power.

Contracts are written for worst-case scenarios, so people can’t outright steal your money. You’re not going to sue someone over a contract because suing people is bad for your dealflow. Real-world decisions are usually based on power.

If you’re the only seed investor in a round, you can get screwed. There aren’t enough co-investors to make a ruckus if the company wants to:

  • Recap the company and start over
  • Raise the cap on your convertible note
  • Give your pro rata to a new investor

If you’re alone, you don’t have the power to fight back. The startup and their new investors can pressure you to renegotiate. So don’t be a herd animal when making an investment decision, but move with a pack when you do.

How a Bad Economy Could Be Good for Stocks

What matters for the stock market is not the state of the real economy as such, but the state of monetary liquidity. In fact, bad economic conditions can actually be good for stocks. This is because monetary liquidity is determined by the interaction between the demand for money and the supply of money, the latter of which is associated with a looser monetary stance during crises.

As economic activity slows down, the demand for the services that the medium of exchange provides in the real economy declines. As a result, for a given pool of money a surplus of money emerges. As a rule, this surplus is put to work in financial markets, including the stock market.

Consequently, the prices of financial assets and stocks are pushed higher. (A deep economic slump also tends to be associated with a strong loosening in the central bank’s monetary stance, which further supports the growth momentum of the money supply.)

This was observed in the 1970s. The yearly growth rate of industrial production fell from 3.5 percent in January 1974 to –12.4 percent in May 1975. The yearly growth rate of the Consumer Price Index (CPI) declined from 12.3 percent in December 1974 to 9.4 percent by June of the following year.

As a result, the yearly growth rate of surplus money climbed from –7.7 percent in March 1974 to 7.6 percent in May 1975. In response to the increase in liquidity—i.e., the surplus money—the S&P500 climbed from 68.6 in December 1974 to 95.2 by June 1975—an increase of 38.8 percent.

Now if the pool of real savings is declining, it is possible that this increase in surplus money will not be employed in the stock market. Instead, investors may prefer to put it in safer assets such as Treasury bonds. This is something that was observed during the Great Depression.

For instance, the yearly growth rate of industrial production fell from 15.3 percent in January 1929 to –24.6 percent in October 1930. The yearly growth rate of the CPI also fell significantly, from –1.2 percent in January 1929 to –6.4 percent in December 1930.

In response to these large declines, the yearly growth rate of surplus money increased from –16.6 percent in May 1929 to 25.5 percent by November 1930.

Despite this strong increase in monetary liquidity, the S&P500 fell from 24.15 in October 1929 to 15.34 by December 1930—a fall of 36.5 percent. The index in fact continued to slide, falling to 4.4 by June 1932—an overall decline of 81.8 percent from October 1929.

I attribute the ineffectiveness of the increase in liquidity in strengthening the stock market between May 1929 and November 1930 to the possibility that the pool of real savings had declined significantly. The ensuing depression and massive unemployment forced people to stay out of any form of investment in stocks. As a result, the increase in liquidity was directed toward assets such as US Treasurys rather than stocks. During this period, the yield on the ten-year Treasury bond fell, from 3.71 percent in August 1929 to 3.19 percent by November 1930.

What is the current US economic background? Economic activity in terms of industrial production growth currently shows a visible weakening. After closing at 5.4 percent per annum in September 2018, the yearly growth rate fell to –1 percent in January 2020. The annual growth rate of the CPI, after having settled at 1.5 percent in February 2019, had climbed to 2.5 percent by January 2020.

The growth momentum of liquidity has shown a visible strengthening since August 2019. The yearly growth rate climbed from –2.7 percent to 4.2 percent by February 2020. The S&P500, however, after closing at 3,231 in December 2019, had plunged by 20 percent by March 2020, closing at 2,585.

Why Warren Buffett’s 10/10/10 Rule Will Make You Insanely Successful and Wealthy

Mega-moguls swear by this rule for smart decision-making — and you will too.

“You cannot make progress without making decisions.” — Jim Rohn

Decision-making is a non-negotiable experience people from all walks of life must confront. No matter how crucial and stressful it can get, a decision usually has to be made in order to arrive at the next station in life.

Ultra-successful people are the easiest target for the harshest decision-making situations. However, successful people like legendary investor Warren Buffett set themselves apart through a systematic way of handling their choices.

These mega-moguls possess a skill that enables them to look into the bigger picture, avoid cognitive biases, and foresee long term results because they know that making smart decisions are necessary to thrive, achieve, and sustain success in life.

A brief on why we make bad decisions

According to recent studies, there are several factors that can negatively affect our decision making process. These might include our past experiences, cognitive biases, and a lot more factors that intensify the situation further. Pile all of that on to a stressful situation, and you have a recipe for subconscious decision-making disaster.

So, how can you avoid your brain’s tendency to make bad decisions?

Ultra-successful people like Warren Buffett have to make choices that can affect millions of dollars (and people) every day. Rather than letting this affect their choices, they utilize a method that could easily be applied to anyone’s life. It is known as the 10/10/10 Rule.

This rule is really simple. You just need to remember three questions, and be able to answer them with a forward-looking perspective:

The questions are:

1. How will I feel about my decision in 10 minutes?

2. How will I feel about my decision in 10 months?

3. How will I feel about my decision in 10 years?

Sounds like a tall order? Trust me, this self-questioning will improve over time as you go along and test it out more frequently.

Here is a simple application of the rule based on a choice I faced at age 22, and a look at how you can apply the rule to your life:

When I was 22, I had just moved to NYC, and I was trying to start my career by landing an interview on Wall Street. Of course, it was imperative for me to dress the part to land the job. With a rapidly evaporating savings account, I knew for a fact that I couldn’t afford a new suit.

I was presented with a dilemma: I could stay in every weekend and start saving up enough to buy the suit… or I could buy the suit by getting a credit card (while enjoying the city life), and hope to pay it off eventually.

Here’s how the 10:10:10 method played out when I thought about buying on credit:

1. How will I feel 10 minutes after buying the suit with a credit card?

I’ll feel good about myself! I don’t want my weekends to be defined by one purchase, and I don’t want to spend my life scrounging pennies.

2. How will I feel 10 months after buying on credit?

If I land a job by then, I’ll be glad I got to enjoy my weekends! But if I don’t, I’ll have to worry about paying off that dress (and not having any income).

3. How will I feel 10 years after buying on credit?

Either way, I’ll (hopefully!) have a job by then. If it takes me a while to land a job, though, I know that credit card debt can snowball very quickly, and I could end up regretting pilling on debt for years to come.

Sure enough, I lived very frugally for a while and saved up to buy the suit, and although I did land a job fairly quickly, I avoided going into debt in the process. And, as I learned, job security on Wall Street isn’t the best, so I was very happy about the extra cash cushion I had built up in case the job didn’t pan out.

How this applies to you

Your brain is hardwired to look towards short term pleasure. However, looking at long-term gratifications and their ramifications allows you to make smarter decisions. As Dr. Stephen Covey put it, “Happiness can be defined as the fruit of the desire and ability to sacrifice what we want now for what we want eventually.”

This method forces you to think further, think smart, and assess the situation by how you would personally respond given the timeline. It saves you from a typical immediate reaction that could impact how you will be in the long run.

Practice is the key to success, and the same goes with this method: as you do it more often, you brain adapts quicker as well. So the next time you have to decide on something, give this long-term lens a try, and you’ll start to see the difference.

The Lucky Advantages All Billionaires Have You Rarely Notice

There is an element of ‘luck’ in every success story. Other names for it include grace, favor, good fortune, chance, and so on.

You can find millionaires who would brag to say that they worked hard to get to where they are. But billionaires are often humble when it comes to this. And there is a reason.

Billionaires have experienced success that humbles their hard work. You can work hard and be a millionaire. But if you are going to be a billionaire, you need to have some ‘luck’.

Almost all billionaires agree that their level of success goes beyond hard work. But hard work is the only way many of them know to prepare themselves for good fortune.

Anyone who tells you that success is solely based on hard work is either lying or hasn’t experienced overwhelming success. This is not making light of working hard. It is just showing that there are other angles people rarely notice.

Most billionaires know someone smarter and more hardworking than they are who haven’t come close to what they have achieved. So, luck matters.

From a broad perspective, luck is a skill. But there are some lucky advantages that count that people rarely notice.

The reason I am pointing them out is that if these advantages are working against you, it is much harder to achieve success. So, it is better to focus on them and turn them in your favor before chasing any business success.

These are 7 lucky advantages that all billionaires have. Most of them are not conscious advantages so even the billionaires rarely notice it.

1. Location

Imagine Warren Buffet was an investor based in Thailand. Do you think he would be the billionaire that he is today? Some great fortune in Thailand can make him a millionaire, but the chances of him becoming a billionaire are slim to none.

What is the reason for this? Well, Warren is based in the country where big money moves and where investors get big money to play with.

Let us assume Mark Zuckerberg was based in Senegal when he was trying to startup Facebook, do you think he would have succeeded? Let’s even say he is in the US but based in Dakota, what are the chances of him succeeding?

That place is called Silicon Valley for a reason. And there is a reason every global startup is trying to have a presence there. Location is the first element of luck.

If you are not in the right location, your hard work should first be to get in the right location. There is the right location for every business to become super successful.

Success can be experienced anywhere, but super success is location-based. In business, you have to be in the same location where your first-adopter market is.

2. Period of History

Many people overlook the impact of today’s society on their wealth and success. All those visionaries that are billionaires today would probably be in a jail somewhere if they had come in maybe 200 BC.

You could say this is in favor of everyone in the world today. But that is not so true. There are those who are ahead of their time. It is someone who takes over from them that will inherit all the success and fame of what they are working on now.

It is important for the entrepreneur or business owner to be relevant to this age first. Today, everyone is familiar with Thomas Edison but only studious people know Nikola Tesla. If you mention Tesla, most people would immediately think of Elon Musk’s auto company.

Tesla focused too much on the future. No doubt he made a profound effect on the present, but he clearly lived way ahead of his period. This is unlike Thomas Edison that just focused all his energy on the present.

Living in a period of history where your work can be properly rewarded is a huge advantage. Billionaires can’t deny this.

3. Partner

A millionaire can get there all alone but billionaires are not all alone. Most billionaires have key partners and allies that made their dream possible.

If their partner had been wrong they would probably be broke or be in a prison somewhere. Big deals entail big bets. And trustworthy partners are necessary for the big bets.

There are people who are unlucky with partners. You don’t know how lucky you are with a good partner until you meet someone who has been unlucky with partners.

Steve Jobs started with Steve Wozniak. There was Bill Gates and Paul Allen. There is Larry Page and Sergey Brin. And the list goes on. Some have very silent partners. An example is where the spouse or a junior employee is a key partner.

4. Team

This is very related to the earlier point about partners. But instead of just one person, this is about a bunch of people.

Business is a team sport. If you try to go in alone, those who know how to play will run you over with their team. Having the right team at the very beginning is a great treasure. You really have to be lucky to have a great team.

Having a great team is not about having nice people. Having a great team is having people who are dedicated to results. Big businesses require tax attorneys, accountants, lawyers, bankers, etc. The business is as strong as the team.

Billionaires have come to the place where they understand that the team is more important than the idea or concept.

5. Mentor or Pacesetter

The easiest way to be rich is to find someone who has done something similar to what you want to do and just follow in their footsteps. Most billionaires have mentors whose insight gave them a lucky advantage.

Some billionaires like Mark Cuban do not have mentors. However, if you look closely, they all have something I call pacesetters.

In business, pioneers suffer a lot. They can eventually achieve something but they do with a lot of scars. Smart people wait for the pioneers to suffer and pave the way, then they follow the already laid path.

Most billionaires are not pioneers. Their path is already paved by someone or a business. The others that look like they are pioneers are those who combine two paths that have not been previously combined before. So, in the real sense of it, they are not really pioneers. Real pioneers get little or no recognition during their time.

Most young entrepreneurs are deceived today into thinking they have to be pioneers. The concept of coming up with something new (and novel) is praised and used to motivate the younger ones. Meanwhile, life is easy with copy and paste (where there is no rule against it).

There are people who have gained a significant amount of wealth by copying what a company does in a distant country and duplicating it in their own country. Smooth and easy.

Make yourself lucky by following a path already paved by a pioneer or pacesetter. If you must be a pioneer yourself, don’t do it at the early stages. When you have attained a level of success, then you can start pioneering.

6. Government

It is very important that you are under the right kind of government that will make your business thrive. There are people who have lost out on their early bird advantage because their governments frustrated their efforts.

All billion-dollar businesses eventually get to the point where they clash with the government. The government must be one that takes a favorable look at big business ventures.

The biggest problem governments can create for big businesses is not about shutting down the business. Most governments today don’t do this. Instead, it is to slow the business down. This makes it lose its leadership status in the global community.

Governments do not operate at the same pace. You would observe that the billionaires are concentrated in countries where the government moves fast and the policies favor big businesses.

Policy matters first. Then, the speed of government operations matters second. You rarely hear about this but it is a huge advantage.

7. Timing

This is the most important of all. One of the definitions of success is being in the right place at the right time. The right place is the right location. The right time is something no one can calculate.

This is purely based on luck or grace or good fortune or whatever you call it. However, it only happens for those who are prepared through hard work. Some successful people have agreed to the fact that the harder they worked, the luckier they get. But you must read between the lines and see all the other factors from above that they unconsciously get right.

There are many good ideas that have failed because of timing. Bill Gross talked about one of his startups in the early 2000s that was designed as an internet video platform that failed. And it was simply because browsers at that time could not support their vision.

Two years after their startup failed, Adobe came up with the solution for internet browsers to support video content easily with Adobe Flash. A few months later, YouTube was born. Their genius idea was too early and it failed as a result. The timing was off.

All big businesses have their share of perfect timings. All billionaires have their experience of perfect timing. Unfortunately, it is not something that can be taught or calculated. You just have to work hard (and smart) and get all the other things right. With that, you are more likely to have the timing fall on you.


There is an elephant in the room. I know. Those who inherited their fortunes by coming from a wealthy family. It is part of following a path already laid by a pacesetter.

The concept here is very simple. Before working your brains out on any project, make sure you have at least 5 of these points working in your favor.

It is smart to work hard at getting these elements right first before deciding what to actually do.

Don’t start with something you hope will bring you success, instead give yourself all the lucky advantages to success and then do what that path brings you

I hope you have learned something.

How to Use the Simple Compound Interest Formula

There are two types of interest, simple and compound. Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Learn more about compound interest, the math formula for calculating it on your own, and how a worksheet can help you practice the concept.

More About What Compound Interest Is

Compound interest is the interest you earn each year that is added to your principal, so that the balance doesn’t merely grow, it grows at an increasing rate. It is one of the most useful concepts in finance. It is the basis of everything from developing a personal savings plan to banking on the long-term growth of the stock market. Compound interest accounts for the effects of inflation, and the importance of paying down your debt.

Compound interest can be thought of as “interest on interest,” and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount.

For example, if you got 15 percent interest on your $1000 investment the first year and you reinvested the money back into the original investment, then in the second year, you would get 15 percent interest on $1000 and the $150 I reinvested. Over time, compound interest will make much more money than simple interest. Or, it will cost you much more on a loan. 

Computing Compound Interest

Today, online calculators can do the computational work for you. But, if you do not have access to a computer, the formula is pretty straightforward.

Use the following formula used to calculate compound interest:

Formula M = P( 1 + i )n
M Final amount including the principal
P The principal amount
i The rate of interest per year
n The number of years invested

Applying the Formula

For example, let’s say that you have $1000 to invest for three years at a 5 percent compound interest rate. Your $1000 would grow to be $1157.62 after three years.

Here’s how you would get that answer using the formula and applying it to the known variables:

  • M = 1000 (1 + 0.05)3 = $1157.62